by Martin Butler
Diversity is all the rage. It has even reached the boardrooms of the UK’s top companies and indeed those that are not so top. Targets are set for the percentage of women and ethnic minorities who should populate these boardrooms. A group known as the 30% Club aims for “30% representation of women on all FTSE 350 boards” and “to include one person of colour”.[1] We are told that although we have some way to go, things are moving in the right direction. This all seems very progressive and few voices, even from the more conservative corners of the business world, object. But there’s something odd about this. Why has an idea about boardroom composition that would further the interests of a diverse population to a far greater extent (and which has been around in the UK since the 1970s) been implacably opposed by the business world? What is even more puzzling is that, far from finding the wholesale acceptance achieved by the aims of the 30% Club, this idea has been rejected out of hand without shame or negative publicity. The idea is that boardrooms ought to incorporate an element of democracy, that employees in a company ought to have at least one elected representative on the board of directors who can advocate for their interests. There is no club to promote a modicum of democracy in UK boardrooms, and there is no pressure for one either.[2]
In the UK, the Bullock Report of 1977 recommended a system of worker directors on the boards of large companies, an idea to those of my generation which seemed as compelling as the idea that boardrooms should be ‘diverse’ is to today’s generation.[3] Of course this report was never implemented, and the coming Thatcher years saw the rise of the neoliberal ideal that the prime purpose of any public company was the ‘maximization of shareholder value’ (known as the Friedman doctrine after the economist Milton Friedman[4]). This excludes any room for boardroom democracy. Over the last two decades there has been talk of a company’s ‘stakeholders’ – in other words, all those with an interest in the success of a company (not just shareholders) – but no mechanism has been introduced that might actually rebalance the scales in favour of the ordinary employee. Short term profits and shareholder value reign supreme. Teresa May timidly suggested introducing some kind of worker representation on the steps of Downing Street after the 2017 election, but again this idea was quickly buried by the powerful business lobby. The experience of the last 50 years seems to be that if companies can get away with low pay and degraded working conditions, by and large they will, which is why the Labour government needed to imposed a minimum wage in 1998. Read more »